BCM NewsWire Highlights Mongolian Business and Economic Developments

BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmongolia.org
info@bcmongolia.org
Issue 219 – April 27, 2012
SEE NEW „MONTHLY MACROECONOMIC OVERVIEW‟ IN ECONOMIC INDICATORS
NEWS HIGHLIGHTS:
Business;
 Mongolia could go it alone on TT, says Erdenes-TT COO;
 Ivanhoe and Chalco look for cooperation with government;
 Chalco tests Mongolia further with proposed stake purchase in Winsway;
 Government will get at least 55 percent of all cash flows from OT, per IMF report;
 Ivanhoe CEO checkmated by Rio;
 Rio to review steps in Chalco's agreement on SouthGobi stake;
 Energy Resources signs 10-year thermal coal contract;
 SouthGobi pushes back Tsagaan Tolgoi sale deadline to December;
 Khan Resources appeals arbitration, looks for funding to continue;
 Entrée Gold continues to advance;
 Mongolian Stock Exchange introducing three-day (T+3) settlement policy;
 Golomt Bank also shelves its bond offering;
 FMG launches new Mongolia investment fund;
 APIP raises USD 15 million in equity private placement;
 Aspire Mining provides funding to rural hospital;
 Deloitte Onch holds opening ceremony;
 Petro Matad to present Mongolia data at U.S. conference;
 Petro Matad appoints new CFO;
 Khan Bank leads cancer campaign;
 Peabody sees strong demand growth from China;
 GE finds extra earnings in industrial business.
Economy
 Mongolia experiences growth in exports;
 Ministry approves new labor safety regulations;
 Staggering costs from inefficient trade regulation;
 Obstacles in oil sector;
 Ceremony held at site of new airport;
 Public servants comprise Mongolians wealthiest;
 Alcohol-related crimes account for more than half of criminal activity in UB;
 Ninjas help sate China's lust for gold;
 Peabody sees China’s coal consumption at 5 billion tons by 2015;
 Gold values improve in first quarter despite headwinds;
 Manufacturers' concerns grow with greater Chinese rare-earths regulations;
 Chinese manufacturing bouncing back.
Politics
 Parliament to decide on foreign investment regulations;
 Passage of foreign investment review law possible within two weeks, says MP;

 MPP backs holding local and state elections on separate dates;
 Amendments to VAT Law submitted;
 Companies fall short on listing requirements;
 Dundgobi residents organize environmental protection group;
 Government names new CIS head;
 Minister calls for greater inspection of exported goods;
 Lithuanian delegation makes headway on economic ties;
 Elbegdorj supports Kyrgyz democratic transformation;
 Instability ahead of June elections.
ANNOUNCEMENTS
ECONOMIC INDICATORS:
 MSE Top 20 Index by Market Capitalization;
 Foreign-listed Companies with Mongolian Assets;
 Monthly Macroeconomic Overview – March 2012;
 Inflation;
 Central Bank policy rate;
 Currency rates.
*Click on titles above to link to articles.
SPONSORS
Khan Bank Eznis Airways
Kempinski Hotel Khan Palace Mongolian National Broadcasting
Mongolian Star Melchers Breakthrough PR
Asia Pacific Securities Oxford Business Group

BCM MONTHLY MEETING RECAP
The meeting on 23 April with Laurenz Melchers in the chair was attended by 95 members and
invited guests. Melchers announced the anticipated arrival of Professor Nigel Finch, lead grant
researcher of the University of Sydney Business School, after receiving a grant to partner with
Mongolia's Ministry of Finance, Financial Regulatory Committee, and Mongolian Stock Exchange to
help impart greater transparency. In addition, the chair pointed out that Carl Robinson, author of
Nomad Empire of Eternal Blue Sky was in attendance.
BCM Executive Director Jim Dwyer introduced the new Working Group Coordinator, Erdenetsetseg.
Her responsibilities will include coordinating the activities of BCM's 6 working groups with over 100
volunteers with recommendations to help develop a better business climate for Mongolia.
BCM membership now stands at 214. The four most recent members are:
1. Czech Embassy – The Czech Republic's Embassy in Ulaanbaatar is the only Czech diplomatic
mission in Mongolia and is currently led by head of mission H.E. Vaclav Jilek. Diplomatic relations
between former Czechoslovakia and Mongolia were established on 25 April 1950. The first
ambassador, Jaromir Voshalik, started his mission in May 1953. Since then, the embassy has helped
implement many projects, including the construction of the Central Hospital, a shoe factory in
Ulaanbaatar, and a cement factory in Darkhan.
2. English School of Mongolia (ESM) – Formerly Erel School, this school opened its doors after major
renovations in September 2011. Unlike many other schools, ESM is an independent school with a
genuinely all-round English feel to it. There are about twenty native-English speaking numbers of
staff on site with more appointments month by month. ESM's facilities include spacious well-
equipped classrooms, interactive white boards, an assembly hall and theater, and two large
physical education halls.
3. Mongolia Talent Network – This employment agency was set up to provide the best practice from
the world into recruitment services to Mongolia. In a world where candidates have to make choices
without really understanding their options, and where talent is one of the biggest breaks on a
company's growth, the Talent Network is committed to bringing transparency into the process and
to matching the right opportunities with the right people.
4. Pamapersada Nusantara (Pama) – This mining operator provides world-class full-cycle services
from exploration to mine planning, equipment operation, infrastructure and roads, and
reclamation. In 2011 Pama produced almost 90 million tons of coal product and removed around 800
bank cubic meters of overburden, most of it on a contract basis to third party owners in Indonesia
as well as for its own invested mines. Pama established a Mongolia representative office on 29
November 2011 and brings its deep industry expertise and investment into Mongolia.
L. Sumati, Director of the Sant Maral Foundation, led the first presentation of the night to discuss
the results his firm‘s Polit Barometer regarding the upcoming June parliamentary elections.
―At first sight, I don‘t think you‘ll see any difference between the two parties,‖ said Sumati. ―The
Mongolian People‘s Party [MPP] has a slight lead over the Democratic Party [DP] in the countryside,
but there is even distribution between the two major parties.‖
Sumati noted that this year‘s election outcome was more unpredictable than previous years, when
he had made startlingly accurate predictions. Trends included a large belief among 76 percent of
those polled that the mining industry would solve all problems, with unemployment standing as the
major concern, as it has in the past as well.
One trend in particular is the greater importance placed on individuals over a party.
―Parties are not as appreciated today. Today there is a focus on personalities.‖
Survey results show that Ganbaatar garnered the most support, even slightly above current Prime
Minister S. Batbold. Also noteworthy was the support for former president N. Enkhbayar prior to his
arrest. However, within the Mongolian People‘s Party (MPP), there is no one that can really

challenge Batbold for the position as head of the party, said Sumati. He added that Ganbaatar is
expected to run for office in the next election, and that ―if he does, I have high expectations that
he will be one of our leaders.‖
For the full report in English or Mongolian language, visit BCMongolia.org, in the “Mongolia
Reports” section.
Igor A. Kovarsky, President and Chief Executive Officer of Kincora Copper Ltd., gave the next
presentation to tell those in attendance about his company and its Bronze Fox copper and gold
project.
Bronze Fox is located on the copper-gold belt in southeast Mongolia that also hosts the world-class
Oyu Tolgoi deposit which is 140 kilometers away. A government-planned rail line from Tavan Tolgoi
to Sainshand, scheduled for construction in 2012, will pass 20 km from the mining site, and an
existing rail line is 200 km away. Kincora plans to take advantage of planned infrastructure for the
Tavan Tolgoi coal project and Oyu Tolgoi for its energy and transportation needs.
The company‘s 2012 strategy is to concentrate on a 25 square-kilometer zone, combined with an
acquisition strategy that includes the recent purchase for mining rights at Tourmaline Hill, adjacent
to Bronze Fox.
The firm has planned for a 2012 exploration program of USD 5.2 million for the project.
For the full presentation, visit BCMongolia.org, in the “Resources, Presentations” section.
Robert Schoellhammer, Country Director of the Asian Development Bank (ADB), and Jan Hansen,
Senior Country Economist, presented next the ADB‘s development outlook for Mongolia.
At the top of the presentation, Schoellhammer reminded the audience of the ADB‘s role in Mongolia
as a resource for advisement and funding to Mongolia and other emerging nations.
―We are a financier, but our mandate is also very much of an advisor,‖ he said.
Hansen showed the audience data on 70.3 percent growth in gross domestic product (GDP) since
2010, in addition over a threefold gain in GDP per capita from 2005 to the current figure of USD
3,000. However, he reminded the audience that the added economic growth to individuals did little
to affect their purchasing power.
―I‘m not aware of any other country with such fast growth,‖ said Hansen, ―but very little of it is
real growth. Most of the growth experienced is from inflation.
The chief economist said that cash handouts from the Human Development Fund (HDF) have
created inflation and made the country more vulnerable to external shocks. Inflation had increased
to 15 percent in March 2012, he said, and ―it‘s likely to stay in the double digits this year and
throughout the next.‖
In order to avoid the perils of ―Dutch disease‖ and ―the resource curse,‖ Hansen said Mongolia will
have to focus on long-term growth and fiscal stability. He lauded the government for the passage of
the Fiscal Stability law in 2010, which is to take effect next year, and recommended more
legislation with this kind of thinking in mind.
For the full report, visit BCMongolia.org, in the “Mongolia Reports” section.
Graeme Hancock, Chief Operating Officer of Erdenes-Tavan Tolgoi, the state-owned company
running operations at the eastern block of the coal mining site, gave the final presentation of the
evening, delivering a status update on the project.
Erdenes-TT owns a majority of the Tavan Tolgoi coal field, the largest undeveloped open-pit coal
mine in the world. Having commenced production in July 2011, the mine has a reported 7.4 billion
tons of coal. One-third of that figure is hard coking coal, a commodity that is becoming increasingly
more valuable as Chinese miners are forced to dig deeper and operate under more dangerous
conditions to procure the mineral.
For greater cost savings the company will construct a coal washing plant and roads. Hancock said
that transport by rail was a much better method, but construction could not be finished until late
2015 at the earliest.
―Even though it is going to cost USD 130 million, we have no choice but to [build a road to the

Chinese border point],‖ said Hancock. He added that the dust from heavy-loaded coal trucks was
creating visibility problems for drivers with more than 20 fatalities in the last year and was killing
two kilometers of pasture land on each side of the dirt road.
For the full presentation, visit BCMongolia.org, in the “Resources, Presentations” section.
BUSINESS
MONGOLIA COULD GO IT ALONE ON TT, SAYS ERDENES-TT COO
Mongolia might choose to go it alone on the development of the western block of its giant Tavan
Tolgoi coal mine after struggling for years to find the right investors, an executive with the state-
owned firm in charge of the project said.
Speaking on Monday at a monthly meeting of the Business Council of Mongolia, where leaders from
Mongolia's private sector come to discuss happenings, Graeme Hancock, the Chief Operating Officer
of Erdenes-Tavan Tolgoi, suggested that the Mongolian government might not be able to appease
the diverse foreign investors hoping to invest in the project.
―In my view, this is a very difficult group to put together into a consortium,‖ said Hancock. ―We've
got a pretty good chance it will never happen.‖
If that were the case, Erdenes-TT would likely reassume control of the property and lead the
western block of the project itself, he said. Last July, Mongolia announced that China's Shenhua
Group, U.S.-based Peabody Energy Corp. and a Russian-Mongolian consortium headed by Russian
Railways would be handed the rights to develop the project, but after Japanese and South Korean
bidders complained the government said the decision was not yet final.
A final decision on the consortium has been repeatedly delayed, and Hancock said the matter was
unlikely to be settled before the parliamentary election in June. Analysts have accused Mongolia of
putting politics ahead of business.
―All options are open to the government,‖ said Dale Choi, chief investment strategist at
Ulaanbaatar-based Frontier Securities. ―I think it's in Mongolia's best interest to have a major coal
company involved because Erdenes is a small young company.‖
Analysts have said a domestic and overseas initial public offering (IPO) for 29 percent of Erdenes-TT
could raise around USD 3 billion. Hancock of Erdenes-TT said a decision to take control over the
western block could potentially double the value of the company. He added that the company
would go ahead with the development of the western block in May or June, whether an investment
agreement had been put in place or not.
Source: Reuters
IVANHOE AND CHALCO LOOK FOR COOPERATION WITH GOVERNMENT
Aluminum Corporation of China Ltd. (Chalco) and Ivanhoe Mines Ltd. said this week they would work
with the Mongolian government regarding any proposed legislation to review a deal between two
companies.
Ivanhoe Mines has signed an agreement to sell its stake in SouthGobi Resources and its coal
operations in Mongolia to the Chinese aluminum company.
The companies said the Mongolian government is considering new foreign investment legislation.
Chinese ownership of Mongolian assets has been a point of contention for Mongolia. Chalco has said
it would not take up any shares under its bid until regulatory approvals from the Mongolian
government and others have been obtained.
―In the event new foreign investment legislation is implemented by the government of Mongolia
prior to the completion of the partial offer for 60 percent of the shares in SouthGobi, Ivanhoe and
Chalco will cooperate with the government to ensure any requirements under such legislation are
satisfied.,‖ the companies said.
Ivanhoe struck a deal earlier this year to sell its 57.6 percent stake in SouthGobi in a tender offer
by the Chinese company for 60 percent of South Gobi. Chalco is offering CAD 8.48 (USD 8.62) per
SouthGobi share and Ivanhoe currently owns 104.8 million shares.

Source: Winnipeg Free Press
CHALCO TESTS MONGOLIA FURTHER WITH PROPOSED STAKE PURCHASE IN WINSWAY
China's state-run Aluminum Corporation of China Ltd. (Chalco) has stepped up its pursuit of
Mongolian coal, announcing a second deal this month despite signs that Mongolia's government is
seeking to derail an earlier deal.
Resource-rich Mongolia has become an attractive target for Chalco, which has long sought to
diversify away from aluminum. But while Mongolia has opened its doors to foreign investors over the
past decade and has willingly sold coal to China, Chinese companies have found it hard to access
Mongolia's vast copper and coal mines directly due to Mongolia's historic mistrust of its giant
neighbor.
Last week the Mongolian government said it would suspend some of SouthGobi Resources' mining
and exploration licenses, a move that many interpreted as an attempt to scupper Chalco's play to
buy 60 percent of SouthGobi for as much as USD 925 million.
―Mongolians see this as creeping Chinese state domination of its economy, which is not welcome.
Mongolians treasure their economic and political independence and will do whatever is necessary to
protect it,‖ a senior executive in Mongolia said.
Chalco has had previous business dealings with Mongolia, however, having secured an agreement to
purchase coal with the Mongolian government-owned Erdenes Tavan Tolgoi project.
China's top aluminum maker is paying HKD 2.12 a share for a 29.9 percent stake in Winsway, a 13
percent premium to Winsway's close on Monday, for a total of USD 308 million.
Source: Reuters
GOVERNMENT WILL GET AT LEAST 55 PERCENT OF ALL CASH FLOWS FROM OT, PER IMF REPORT
Oyu Tolgoi LLC has refuted rumors in the media that the Mongolian government would not benefit
from its ownership share of Oyu Tolgoi for many decades.
The company said the government does not have to borrow any money for its share of the project—
the government never goes into debt. All payments for the government's share will come out of
dividends, and the government never puts any money at risk. Mongolia's government gets the most
out of Oyu Tolgoi, as it will get at least 55 percent—a conservative estimate according to a
spokesperson—of all cash flows according to the International Monetary Fund's (IMF's) 2010 report:
―Mongolia: The Fiscal Regime for Mining—A Way Forward.‖ Rio Tinto PLC and Ivanhoe Mines Ltd. will
have paid USD 700 million to the government before the mine is operational, so the government is
already benefiting.
Source: Oyu Tolgoi LLC
IVANHOE CEO CHECKMATED BY RIO
Twelve years after beginning his quest to build a copper mine in the Gobi Desert, it is checkmate
for Robert Friedland.
Ivanhoe Mines Ltd. said the billionaire investor resigned as chief executive officer last week, along
with other top executives. It said Rio Tinto PLC agreed to ensure funding of the USD 6 billion Oyu
Tolgoi project's construction. The accord means Rio is free to appoint Ivanhoe's management,
cementing control of the company three months after increasing its stake to 51 percent.
Oyu Tolgoi is just the latest of several chapters in the often controversial career of Friedland, who
holds a 14 percent stake in Ivanhoe. A one-time mentor to Apple Inc. co-founder Steve Jobs,
Friedland, 61, has raised funds for mines in North America and Asia since the mid-1980s.
Ivanhoe Mines' involvement in Mongolia dates back to 2000 when it signed an option with BHP
Billiton Ltd. to explore in the south of the country. That led Ivanhoe to buy the Oyu Tolgoi deposit.
It bought BHP's remaining 2 percent copper-smelting royalty in 2003 for USD 37 million.
To raise the capital required to build the mine, Ivanhoe sold a 10 percent stake to London-based Rio
in 2006. The relationship between the two companies became fractious, culminating in a dispute
over a shareholder rights plan, or poison pill, put in place by Ivanhoe to stop any unsolicited
takeover. In December an arbitrator ruled in favor of Rio, allowing it to gain control of Oyu Tolgoi.

Friedland, who flies his own jet and has a personal fortune estimated at USD 2.8 billion, may be
shifting his focus to Africa with a planned initial public offering (IPO) of shares in Ivanplats Ltd. The
company, which he controls, owns a copper deposit in the Democratic Republic of Congo (DRC) and
a South African platinum project. It may seek to raise as much as USD 1 billion in an IPO as early as
the second quarter.
Source: Businesses Week
RIO TO REVIEW NEXT STEPS IN CHALCO'S AGREEMENT ON SOUTHGOBI STAKE
Rio Tinto PLC said it will review the next steps regarding Ivanhoe Mines Ltd.'s stake agreement in
SouthGobi Resources Ltd. to Chalco now that it has control of Ivanhoe Mines‘ board.
Rio Tinto's chief executive officer, Tom Albanese, speaking at the annual general meeting
reaffirmed that the transaction is commercially competitive and does not run against his company's
primary investment objective in Ivanhoe Mines, the developer of the Oyu Tolgoi copper and gold
mine.
Earlier this month Aluminum Corp. of China Ltd. (Chalco), China's largest aluminum producer by
output, agreed to buy up to a 60 percent stake in SouthGobi Resources for as much as USD 925
million to diversify into resource-rich Mongolia. Ivanhoe owns 57.6 percent of SouthGobi.
The deal is currently being reviewed by the Mongolian government on national-security grounds and
has prompted the government to move to suspend some of the company's licenses.
―We are going to seek to understand the government's position now that we are the new
management of Ivanhoe,‖ Albanese said.
Rio Tinto owns a 51 percent stake in Ivanhoe Mines, which in turn owns a 66 percent stake in Oyu
Tolgoi LLC.
Source: Dow Jones Newswires
ENERGY RESOURCES SIGNS 10-YEAR THERMAL COAL CONTRACT
Energy Resources LLC has agreed to export coal to China Datang Overseas Investment (CDOI) for 10
years.
The coal mining firm has signed a contract to sell 500,000 to 2 million tons of thermal coal annually
at market prices for ten years. CDOI is an energy provider that specializes in construction and coal
trade. This deal expands upon previous trade relations for the sale of coking coal.
Peabody Energy Corp. has also agreed to export thermal coal to China from its Tugrug Nuur mine in
Tuv Aimag.
Source: Udriin Sonin
SOUTHGOBI PUSHES BACK TSAGAAN TOLGOI SALE DEADLINE TO DECEMBER
Southern Mongolia based coal miner SouthGobi Resources Ltd. announced that its expected closing
date of the sale of the Tsagaan Tolgoi deposit to Modun Resources Ltd. has been extended to 31
December, 2012.
SouthGobi Resources announced this month that the Mineral Resource Authority of Mongolia had
requested suspension of certain mining exploration licenses it holds. The extension of the expected
closing date with Modun Resources allows additional time to resolve any issues. All other material
terms of the deal remain unchanged.
The company's flagship coal mine, Ovoot Tolgoi, is producing and selling coal to customers in China.
The company plans to supply a wide range of coal products to markets in Asia.
Source: MarketWatch
KHAN RESOURCES APPEALS ARBITRATION, LOOKS FOR FUNDING TO CONTINUE
Canadian junior Khan Resources Inc. has filed an appeal in an Ontario court challenging a 9 March
decision that upheld Atomredmetzoloto JSC's (ARMZ's) appeal to stop Khan Resource's lawsuit
against the Russian miner.
Khan Resources claims that ARMZ, which is a government-owned company, interfered with its
uranium interests in Mongolia, and is seeking damages of CAD 300 million (USD 302.8 million).

The junior miner was looking to, among other things, restore a prior order of the Superior Court of
Justice that validated service of the statement of claim on ARMZ, which the Russian government
has since refused to serve on the company.
Meanwhile, Khan Resources also announced a private placement to raise USD 2.31 million. The
company plans to use the proceeds of the offering to advance its international arbitration case for
CAD 200 million against the Government of Mongolia, related to the arbitration with ARMZ. It would
issue 13.6 million shares at USD 0.17 apiece.
Last month, Ontario Superior Court of Justice upheld ARMZ's appeal.
Source: Mining Weekly
ENTRÉE GOLD CONTINUES TO ADVANCE
Ivanhoe Mines Ltd. announced that it has agreed with its majority shareholder Rio Tinto PLC that
established the latter's support for a series of funding measures expected to cover all projected
capital requirements for the Oyu Tolgoi mining complex for the next four to five years.
The ―Lift 1‖ portion of the Entree-Oyu Tolgoi LLC joint venture's Hugo North Extension deposit is
included in the first phase of development. Entrée Gold Inc. has a 20 percent carried interest in the
Huge North Extension deposit and the much larger Heruga deposit, both of which form part of the
Oyu Tolgoi mining complex.
―The strong financial commitment that has been displayed by Rio Tinto to date and the pledge of
continued financial support in developing the Oyu Tolgoi project provides Entrée Gold and its
shareholders, with additional assurance that this project will advance rapidly towards production
and is on track to become of the other world's largest mines,‖ said Greg Crowe, president and chief
executive officer.
―Few other juniors can boast such a significant interest in a world-class project of this magnitude.‖
On 30 March Entrée Gold filed an updated technical report on its Lookout Hill property. It discusses
the impact of the updated mine plan on the joint-venture property as well as future development
options for the considerable assets.
The Hugo North extension copper-gold deposit is a direct extension of OT LLC's Hugo Drummet ore
body. Hugo North Extensions hosts indicated resources of 4.6 billion pounds of copper and 2.3
million ounces of gold plus inferred resources of 2.4 billion pounds of copper and 95,000 ounces of
gold.
Read more…
The joint venture's Heruga copper-gold-molybdenum deposit, which lies to the south of the Oyu
Tolgoi mining license, hosts an inferred resource of 9.6 billion pounds of copper, 14.3 million
ounces of gold and 280 million pounds of molybdenum.
Construction of phase one of the Oyu Tolgoi mining complex is now over 77 percent complete and is
on track for first development production in the second half of 2012. As the project advances,
Entree gold expects greater certainty to the timing of production and eventual cash flows.
Source: Market Watch
MONGOLIAN STOCK EXCHANGE INTRODUCING THREE-DAY (T+3) SETTLEMENT POLICY
The Mongolian Stock Exchange (MSE) is taking steps toward international trading and settlement
standards.
The MSE is introducing the internationally recognized T+3 settlement cycle, which allows for
transfers to complete purchases in three business days. The move from pre-funding before a
purchase is made to a T-3 settlement cycle is designed to significantly improve the liquidity of the
market as well as to increase its attractiveness to foreign investors.
For retail investors the most important changes are the opening of a special share trading account
at a broker's clearing bank and the ability to make remittances directly into the settlement account
of a broker.
Source: Mongolian Stock Exchange

GOLOMT BANK ALSO SHELVES ITS BOND OFFERING
Golomt Bank, Mongolia's largest privately owned bank, has decided not to go ahead with a bond
offering after meeting investors for a potential Reg S/144a deal.
―There wasn't necessarily a deal out there. When it was announced it was said there may be a deal
to follow,‖ said a source close to the development who confirmed the borrower had decided not to
pursue a transaction at the current time.
Earlier this month, the lender had met investors at presentations arranged by Deutsche Bank,
Morgan Stanley and UBS. The meetings concluded on 18 April and S&P had assigned a B+ rating to
the proposed dollar-denominated senior unsecured notes. Size and terms were yet to be
determined.
Golomt follows fellow Mongolian issuer XacBank, which also puts its proposed debut global offering
on hold with the possibility of returning to the market at a later point.
Read more…
XacBank was marketing a 3-year Reg S deal with a price whisper of around 10 percent. The
expected issue size was USD 100 million to USD 150 million, drawn from the lender's USD 300 million
medium-term note program. XacBank is rated ―Ba3/-/B.‖ ING Bank and UBS are lead managers.
Source: Reuters
FMG LAUNCHES NEW MONGOLIA INVESTMENT FUND
A new investment fund focusing on Mongolia has been launched by FMG, a specialist in emerging
markets investments, to capitalize on the country's booming economy and close economic links to
China.
―Most observers rank Mongolia as the fastest growing economy in the years to come,‖ said Arild
Johansen, a partner of FMG. ―It has huge future revenues potential and is blessed with key
resources for a hungry growing world, and costs advantaged of being right next door to the largest
commodity consumer of them all, China.‖
The fund will invest in various securities among the top 25 liquid names on the MSE. The assets
allocation of the fund is: 4 percent financials, 5 percent real estate, 10 percent construction, 39
percent consumer, 42 percent mining; and the five largest holdings are APU, Remicon, Sharyn Gol,
Tavan Tolgoi, and Talkh Chikher.
Source: Investment Europe
APIP RAISES USD 15 MILLION IN EQUITY PRIVATE PLACEMENT
Mongolia-focused property and cement production firm Asia Pacific Investment Partners (APIP)
closed its private placement offering at a pre-money valuation of USD 140 million. It received
demand for 2,136,622 common shares at HKD 55 (USD 7.09) per share for aggregate gross proceeds
of HKD 117.5 million (USD 15 million), exceeding the firm's target of USD 10 million. This is the first
time we have allowed equity investments at the parent company,‖ said Lee Cashell, chief executive
officer of APIP. He later added, ―the fundraise will reinforce APIP's ability to list on a major
exchange in 2013... [W]e have begun talking to listing authorities and initiated talks with some
large investment banks.‖
APIP will use the proceeds to stockpile a greater quantity of clinker—material used in the
production of cement—when prices are below their summer peak and increase the pace of its 2012-
2013 capital expenditure timetable to build a parallel cement crushing line and a clinker kiln at its
limestone deposit in the south of Mongolia. Another portion of the funds will be used to finance the
construction of the Olympic Residence, a 25,000-square meter luxury residential property.
There will also be a small injection of the proceeds into Asia Finance, a high margin lending
business currently providing loans to small-medium enterprises in the mining supply chain.
Source: Asia Pacific Investment Partners
ASPIRE MINING PROVIDES FUNDING TO RURAL HOSPITAL
Coal explorer Aspire Mining Ltd. has agreed to assist in the funding for a local hospital near its
Ovoot coking coal project in Northern Mongolia.

Aspire Mining, in partnership with the Khuvsgul provincial government, has agreed to contribute 50
percent of the funds needed to complete the construction of a new 20 bed hospital at Tsetserleg
Soum, with the provincial government to provide the balance.
Construction first began in 2010 but came to a halt in June 2011 due to lack of funds. To date, the
Khuvsgul government has spent USD 140,750 on the hospital's construction.
Tsetserleg has been badly in need of an upgraded hospital ever since a 2009 government inspection
report recommended the closure of its existing facility. The new hospital, designed by local
Mongolian company TETU LLC, will include facilities to provide medical aid for special
circumstances, including ill children, maternity, pre-and postnatal care, and quarantine for
infectious diseases.
In addition to contributing to the construction of the new hospital, the company has also assisted
with funding of the nearby Mogoin Gol Health Clinic. As part of its aid, Aspire Mining is funding the
salary of the clinic's doctor in-full. The mining firm has also offered the services of the Ovoot-based
doctor for use by Tsetserleg and Tsagaan Uul Soum's residents.
Source: Aspire Mining Ltd.
DELOITTE ONCH HOLDS OPENING CEREMONY
Deloitte Onch LLC celebrated its official launch last Friday with a reception at the Blue Sky Tower
in Ulaanbaatar. In attendance were D. Zorigt, Minister of Mineral Resources and Energy, with the
Deloitte Onch team and Global Deloitte leadership officials.
The event celebrated the official launch of Deloitte Onch as a new member firm of Deloitte Touche
Tohmatsu Ltd. (DTTL). Minister Zorigt offered his congratulations to Deloitte Onch for the
successful opening of a Mongolian office.
"I welcome the establishment of Deloitte in Mongolia through working with our local firm led by Ms.
Onchinsuren," he said. "I am pleased to know that through this joining with Deloitte, Ms.
Onchinsuren's team will be bringing world-class expertise--especially in the mining and resource
sector--to serve local and international clients."
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients
spanning multiple industries, with extensive global experience in the energy and resources industry.
The company has made Mongolia a priority market due to its significant natural resources and a
growing number of domestic enterprises requiring top-quality professional services.
Source: Deloitte Touche Tohmatsu LLC
PETRO MATAD TO PRESENT MONGOLIA DATA AT U.S. CONFERENCE
Petro Matad Ltd. will submit a scientific paper to the AAPG Conference in California on 24 April,
concerning conclusions made from its explorations activities.
Kurt Constenius, Petro Matad's chief geophysicist, will present a paper dealing with Jurassic-to
early-Cretaceous rifting at the Tugrug and Taatsiin Tsagaan Nuur Basins located in Gobi-Altai Aimag
based on data collected from Blocks IV and V.
The company has reported that Blocks IV and V are at their final stages of completion. Internal
reports outlining the results from 2011 exploration will contain conclusions and recommendations
for further exploration there. Analysis of the 2011 Block XX drilling program is ongoing, with
fieldwork currently on hiatus.
No decisions about the 2012 field programs will be made until analysis of the 2011 program is
complete.
Source: Petro Matad Ltd.
PETRO MATAD APPOINTS NEW CFO
Petro Matad Ltd. has chosen John Henricksen to replace retiring Chief Financial Officer Clyde Evans
from his executive position. Evans will remain as a non-executive director of the company.
―Petro Matad is delighted to welcome John to the position of CFO,‖ said chief executive Douglas
McGay. He later added, ―His relocation to work with the company's executive and technical
professionals in Mongolia is another forward step for the efficient and progressive management of

the company.‖
Henricksen has 36 years experience in the oil and gas industry and was most recently Salamander
Energy's Country Manager for Indonesia. He will run the group's accounting and financial activities
from the group's main offices in Ulaanbaatar. Subsequently, the group's office in Perth, Australia is
being closed.
Additionally, Petro Matad has reported that exploration manager James Coogan has also retired and
has nearly completed the process of hiring a replacement. In the meantime Chief Geologist Kurt
Constenius is managing the team.
Source: Petro Matad Ltd.
KHAN BANK LEADS CANCER CAMPAIGN
Khan Bank and the National Cancer Centre of Mongolia launched a national campaign on World
Cancer Day in February, along with support from the Mongolian National Broadcaster (MNB), to raise
awareness of cancer issues in Mongolia.
This year's event was the second organized campaign against cancer. Umnugobi, Dundgobi, Selenge,
Uvs, Bayankhongor, Uvurkhangai, Gobi-Altai, Zavkhan, Sukhbaatar, Dornogobi, Khuvsgul, and Bulgan
Aimags were identified as having the highest number of cancer cases of Mongolia's 21 provinces,
based on statistics from 2011.
The campaign was first organized in 2011 to increase public awareness about early detection and
prevention. As part of the campaign, specialists visited all 21 provinces to deliver information on
cancer prevention to local residents, conduct trainings on early diagnosis and treatment to local
doctors, and held screenings for those in high-risk groups. The visiting doctors screened 20,000
people for cancer, finding positive results in 19 percent of all screenings. Fifty-four percent of the
patients screened were found to have other diseases as well.
According to the Union for International Cancer Control, each year over 12 million people are
diagnosed with cancer, and 7.6 million dies of cancerous diseases worldwide. In Mongolia, 4,000
new cancer diagnoses and 3,000 cancer related-deaths are reported each year. Cancer kills one in
five Mongolians each year, making cancer the second leading cause of death in the country.
Statistics show that 75 percent of all diagnosed cancer cases have already progressed to the third or
fourth stage, too far advanced for treatment.
Source: Khan Bank
PEABODY SEES STRONG DEMAND GROWTH FROM CHINA
Peabody Energy Corp.‘s first quarter revenues rose 17 percent to USD 2.04 billion, driven by a 27
percent increase in Australian revenues per ton and a 7 percent rise from the United States.
Operating profit increased 11 percent to USD 350.2 million, with operating cash flows reaching a 79
percent gain to USD 395.5 million.
"Our operations contributed higher revenues and margins per ton in all regions, demonstrating the
strength of our diverse platform in the face of challenging conditions," Gregory Boyce, Peabody
Energy‘s Chairman and Chief Executive Officer, said.
The chief executive also had a positive outlook on Chinese consumption of coal and metals, which
bodes well for Mongolia as its southern neighbor is the primary consumer of Mongolian goods.
"Near-term markets reflect the strength of Asia re-emerging as the leader of global economic
growth and increased coal consumption," said Boyce. "China's steel production rebounded in March,
China's coal imports are running at a record pace, significant new global is coming on line, and we
look for a 10 percent increase in seaborne coal demand in 2012.
Peabody reported global electricity consumption and steel production have driven record global
coal imports, which are expected to increase 10 percent in 2012. China's net coal imports through
February totaled 58 million tons, an 81 percent increase from a year ago, to meet rising coastal
demand for both metallurgical and thermal coal. Chinese steel production is on the rise, along with
7 percent growth in electricity generation.
Peabody Energy is targeting USD 450 million to 550 million for its second quarter earnings.
Source: Peabody Energy Corp.

GE FINDS EXTRA EARNINGS IN INDUSTRIAL BUSINESS
Since the credit crisis hit, Salkhit wind farm turbine supplier General Electric Co.'s industrial
business has been overshadowed by the travails, sell-offs and gradual recovery of the company's big
finance arm, GE Capital.
But first-quarter financial results on Friday point to a transition. The company's earnings slightly
surpassed investor expectations, but the most noteworthy detail was that revenue in the industrial
side of its business grew by 14 percent. Ignoring the contributions from acquisitions, the industrial
growth rate was still a solid 11 percent.
―That's the strongest industrial growth since the crisis,‖ said Jeffrey Immelt, the company's chief
executive.
There are weak spots in the company's broad collection of businesses. Financial turmoil in Europe
continues to drag down sales of some industrial products, like medical imaging equipment. Profits
in its household appliance business fell 11 percent, held down by the struggling housing market. Yet
overall, Immelt said, the first quarter provided reason for optimism.
The revenue for the company as a whole fell 8 percent from the year-ago quarter, to USD 35.2
billion. Its net profit fell 12 percent to USD 3 billion, compared with USD 3.4 billion in the year-ago
quarter.
The 14 percent growth in the industrial business came from big-ticket manufactured goods, like jet
engines, railway locomotives, power generators, medical-imaging equipment, and even wind
turbines, such as those to be used at Newcom LLC's now-developing Salkhit wind farm. The wind
business is rebounding this year.
General Electric's industrial products, analysts say, are so-called long-cycle businesses. Orders can
be placed a year or more before a purchase, and equipment may remain in use for many years,
requiring servicing. For some lines, like jet engines, profits on the initial sale are slender, while the
real money is made on contracts for services and maintenance, and on spare parts.
As a result, the real profit payoff from a strengthening industrial business is not fully evident yet.
Source: New York Times
ECONOMY
MONGOLIA EXPERIENCES GROWTH IN EXPORTS
Earnings from Mongolian exports grew in March despite an expected fall.
Mongolian exports grew by 141.7 million to USD 883.8 million, a 19.1 percent rise from year-ago
reports. Hard coal exports comprised 40.6 percent of total exports, processed copper was 22.5
percent, iron ore and processed iron was 12.2 percent, and unprocessed petroleum was 8.5
percent.
Gold miner Boroo Gold LLC reported that it had exported 427 kilograms of gold to Canada.
The growth experienced came despite a USD 24.7 million expected fall due to decreased volumes of
zinc ore and processed zinc, and unprocessed gold and fluorspar. Yet gains were made due to
increased volumes of hard coking coal, iron ore and processed iron, and unprocessed petroleum.
The added volumes of commodities brought export growth of USD 95.3 million, while price gains to
commodities accounted for USD 68.8 million.
Source: Zuunii Medee
MINISTRY APPROVES NEW LABOR SAFETY REGULATIONS
Officials reported that the situation has become critical as 403 individuals have experienced
accidents in the work place and 75 have died.
Most of the victims had been working in the mining or construction industry. Accidents in the work
place have grown at power stations and those working in transportation as well.
Another problem is the growing number of illnesses originating from the work place, with a
recorded 8,877 people having grown sick while at work. Most patients were those who work in gold
and fluorspar mining operations. Other diseases such as allergies, respiratory ailments, and toxin

poisonings have become more common, in addition to general injury and mental exhaustion.
Officials also reported that there has been a rise in the number of deaths from cancer due to
exposure to chemical agents.
STAGGERING COSTS FROM INEFFICIENT TRADE REGULATION
Mongolia's inefficient regulation of imports and exports is imposing staggering costs on its businesses
and its economy.
Basic data from the World Bank Doing Business survey is the foundation for a series of simple
calculations to quantify the impacts of the most obvious sources of extra cost and delay. Mongolia
ranks 159th out of 183 economies surveyed on the ―Trading across Borders‖ indicator of the 2012
Doing Business survey. Its low rank arises because the number of documents and the time and
expense required to export and import are all higher than average.
Wasteful spending in Mongolia has resulted already in almost USD 20 million annually in unnecessary
document costs; 80 million in lost opportunity costs; more than USD 2 billion in reduced trade
volumes and the associated loss of about USD 154 million in revenues collected by the Customs
General Administration (CGA) on imports; and nearly USD 2 billion lost gross domestic product
growth.
The analysis focuses on the document preparation phase of the four stages in the export-import
process. Mongolia requires eight documents and 28 days to export and import in the document
preparation phase compared with just three or four days in France.
For the full report, visit BCMongolia.org in the “Mongolia Reports” section.
Source: USAID
OBSTACLES IN OIL SECTOR
Petrovis LLC's chairperson has suggested that some private companies should be absorbed by the
government.
―We do not want to lose precious time competing against each other,‖ said J. Oyungerel. ―It is both
reasonable and possible to compete with companies from other nations. The initial public offering
[IPO] released by [Mongolian Mining Corp.] proved that Mongolia has the potential to compete on
the world market.‖
She added that oil exploration was the riskiest venture an oil company can take, and it is greater
than even mineral exploration. Since finding equity is not always possible on the stock market, and
because there is hesitancy to invest due to global economic downturn, alternative sources for
funding are needed.
However, the chairwoman said that when it came to Tavan Tolgoi, the government was getting it
wrong.
When speaking on the prospect of an oil refinery built by fuel distributors, she said it hinged on a
long-term crude oil importing contract from Russia. She said Mongolia would need to produce at
least two million tons of processed fuels to turn a profit. She added that the abundance of coal in
Mongolia, in addition to its cheap price, makes coal-to-liquid synthetic fuels a nice alternative
option.
Additionally, Mongolia does not have the financial resources to properly develop a larger fuel
reserve, she added. Mongolia currently has a fuel reserve to last up to three months.
Source: UB Post
CEREMONY HELD AT SITE OF NEW AIRPORT
Prime Mister S. Batbold and a delegation of officials led a groundbreaking ceremony at Khusigt
valley for the site of a new airport.
Batbold noted that the government has intensified its efforts toward civil air service development
since 2008. The government negotiated a soft loan from the Japan Bank for International
Cooperation of JPY 28.8 billion (USD355.1 million) in 2008 to finance construction. The premier said
the new airport would meet international standards and contribute to the government's aviation

goals.
The first step for development is the construction of a flood dam, electricity lines, and
communication cables. Batbold also said that a railway and automobile freight center would be
established along with a suburban community of 100,000 near the airport. Khusigt valley is located
60 kilometers from Ulaanbaatar.
The airport would be comprised of 30 structures and two runways to serve 1,100 expected
passengers every hour and 1.65 million annually by 2019. The expected capacity for freight is
11,900 tons.
Source: News.mn
PUBLIC SERVANTS COMPRISE MONGOLIANS WEALTHIEST
Politicians make up the entirety of Mongolia's wealthiest, reported the Independent Authority
Against Corruption (IAAC) in a presentation on incomes of more than 5,000 people in 2011. The
presentation was based on information provided voluntarily on assets held by individuals.
Some well known, wealthy figures in government, such as B. Batbayar, N. ―Fortuna‖ Batbayar, and
MPs S. Byambatsogt and Ts. Munkh-Orgil, opted not to disclose details of their wealth. Some MPs
reported outstanding debts as well, which will have to be settled or they will lose their privileges to
run for election.
Only three MPs reported that they had received gifts, likely due to the new election law which
would forbid their acceptance.
Source: Zuunii Medee
ALCOHOL-RELATED CRIMES ACCOUNT FOR MORE THAN HALF OF CRIMINAL ACTIVITY IN UB
Statistics on alcohol consumption show that more than half of the population, predominately males,
drink to excess in Mongolia.
The data shows that 55.2 percent of adults drink alcohol to excess. About 140,000 have entered
health facilities after excessive alcohol consumption, amounting to MNT 1 billion in fees paid.
Another 12,000 individuals have undergone treatment for alcoholism.
On average, 60 percent of auto accidents and 80 percent of sudden deaths have been related to
alcohol. Crimes somehow related to alcohol have comprised 43.7 percent outside the city and 55.2
percent in the capital.
Source: Unuudur
NINJAS HELP SATE CHINA'S LUST FOR GOLD
In the last five years, dwindling legal gold supplies and a spike in black market demand from China
have made work more lucrative for Mongolia's ―ninja miners‖—so called because of the large green
pans carried on their backs that look like turtle shells. For thousands of dirt-poor herders, the
soaring prices alone are enough to justify years of harassment and hard labor.
China's annual gold output reached a record 361 metric tons last year, but demand continues to
outstrip supply. Spot international gold prices hit a record high of USD 1,920.30 an ounce in
September. The price has fallen back to around USD 1,636 but gold remains at historically high
levels after a decade-long rally.
While all producers are legally obliged to sell their gold to the Central Bank, the black market is
often a better option. So-called ―changers,‖ middle men who buy up the gold procured by ninjas to
sell to China, can offer prices above the official rate, and they can also avoid the 10 percent tax on
sales.
Mining firms and ninjas forged an uneasy but often symbolic relationship. The companies had to
defend themselves against raids from ninja crews, sometimes using brute force, but they would also
track ninja activity for new discoveries. Since the crackdown on large-scale mining, Mongolia's
ninjas are now returning to old and abandoned properties and have even started ransacking tailing
dams for gold.
Singo, a Zimbabwean gold mining engineer, has been trying to get ninjas organized. The small gold
processing center at Bornuur is a far cry from the giant industrial gold producers ploughing through

Mongolia's plateau and pasture. The plant was designed to provide a safer channel for the ninjas to
sell their gold, but many have chosen to take their chances with the changers rather than the
Central Bank.
It has proved nearly impossible to eliminate the ninjas, and experts like Singo say it would make
more sense for the government to ―formalize‖ them and bring their supplies back onto the official
market. For the ninjas themselves, official recognition would at least earn them respect.
Source: Reuters
PEABODY SEES CHINA‟S COAL CONSUMPTION AT 5 BILLION TONS BY 2015
Peabody Energy Corp., the largest U.S. coal miner and a possible 24 percent stakeholder in the
Tavan Tolgoi western Tsankhi project, on Thursday said it expected global demand for coal to
increase significantly over the next decade, despite cooling U.S. markets.
―Near-term markets reflect the strength of Asia re-emerging as the leader of global economic
growth and increased coal consumption. China's steel production rebounded in March, its coal
imports are running at a record pace, significant new global generation is coming on line, and we
look for a 10 percent increase in seaborne coal demand in 2012,‖ chief executive officer Gregory
Boyce said in the company's quarterly management statement.
He added that growing global electricity generation and rising steel production capacity use was
driving record global coal imports, which were expected to increase by 10 percent during this year.
China's net coal import through February totaled 58 million tons, an 81 percent increase over the
prior year to meet rising coastal demand for both metallurgical and thermal coal.
Peabody Energy expected China's coal consumption to grow by more than one billion tons by 2015 to
about five billion tons a year. Further, global steel production was expected to increase as
emerging nations continued to urbanize and industrialize, prompting Peabody Energy to anticipate
global metallurgical coal demand growth of about 50 million tons a year every year over the next
five-plus years.
Peabody Energy reported a slight drop in year-on-year first-quarter profit. However first-quarter
revenue rose 17 percent to 2.04 billion, driven by a 27 percent increase in Australian revenue a ton
and a 7 percent rise in U.S. revenue a ton.
The company targeted total sales this year of between 235 million tons to 255 million tons.
GOLD VALUES IMPROVE IN FIRST QUARTER DESPITE HEADWINDS
Gold ended this first quarter 8.6 percent higher in London at USD 1,662.50 an ounce, the World
Gold Council said on Wednesday in its quarterly gold investment commentary.
The council described the quarter as being ―eventful: and despite increased volatility in capital
markets, the metal achieved rising prices in all major currencies, with yen investors benefiting
most.
The precious metal's long-term price trend remained unaffected during the quarter, despite a
number of headwinds, with primary macroeconomic events such as the broad-based U.S. economic
data strength, concerns about China's economic growth slowdown, concerns about the European
Central Bank's loans and the future of Europe's bailout potential shaping gold's performance during
the quarter.
While gold's price volatility was elevated, it continued to exhibit upside skew. Gold's yearly
volatility measured 20.4 percent during the first quarter, registering 21.8 percent on the upside and
only 16.4 percent on the downside.
Last week, precious metals consultancy Thomson Reuters GFMS warned of short-term price
volatility, predicting the gold price could possibly decline to below USD 1,550 an ounce in the next
two months. It added, however, that a push towards USD 2,000 an ounce ―was definitely in the
cards before the year is out.‖

MANUFACTURERS' CONCERNS GROW WITH GREATER CHINESE RARE-EARTHS REGULATIONS
China continues to impose new controls on its critical rare-earths industry, a move that could
further raise the minerals prices and curtail the availability for western manufacturer. Companies
such as Siemens AG and Black Ridge Mining NL have shown interest in procuring rare-earth minerals
from Mongolia to help make up for the gap in demand incurred by China's regulations.
The new steps by China would ―implement stricter environmental policies for extraction of rare-
earth resources,‖ said China's vice minister of industry and information technology. In addition, Su
said that the country would place all 142 rare-earths companies in China into a single organization,
the Rare-Earths Industry Association, which would allow Chinese officials to enforce stricter
environmental and resource development standards over rare-earths production and sales.
Combined with China's near monopoly in rare-earths minerals—in 2011 the country produced 97
percent of the world's supply—China's more aggressive policy toward protecting this industry has
Western nations on edge. Although the 2012 export quota for rare-earths will be unchanged at
around 31,000 metric tons, experts say that is just a temporary respite and that future export
reductions are inevitable. Regulations did also include expanded limitations and conditions in areas
such as environmental considerations.
Over the past year, some American, European, and Japanese companies and institutions have
switched to substitutes and devote research to finding alternatives. Experts say, however, that the
critical attributes of rare-earths, including their magnetic, conductive, and luminescent properties,
will contribute to make them crucial to future technological breakthroughs and sustainable energy.
Read more…
While rare-earths are not actually rare—only a few of the 17 substances actually occur in small
quantities—they seldom appear in large enough concentrations to justify heavy monetary
investment. Price fluctuations are common too. In the third quarter of 2011, prices for certain
rare-earths surged before decreasing slightly and leveling off. Some rare-earths can be bought on
the international market for as little as USD 27 a kilogram while others cost more than USD 2,000 a
kilogram.
Source: International Business Times
CHINESE MANUFACTURING BOUNCING BACK
A closely watched monthly survey, which is compiled by Markit and sponsored by HSBC, found that
although conditions at factories remain difficult, government efforts to reinvigorate economic
growth during the last few months had filtered through to companies. Mongolian growth is heavily
dependent on Chinese manufacturing as it is an indicator for Chinese growth which fuels demand
for raw materials imported from Mongolia.
The reading for April for the survey, the purchasing managers index (PMI), was released on Monday
and was 49.1. April was the sixth consecutive month of reading below 50, which separates
expansion from contraction. In March the reading was 48.3.
The improvement underscored the view held by many analysts that the Chinese economy is on
course for a gradual slowdown, rather than a sharp collapse this year—if, as is widely expected, the
authorities take more steps to bolster growth in coming months.
The once torrid pace of growth slowed last year as demand weakened because of the debt problems
in the Euro zone, sluggish growth in the United States economy, and tightened measures by Beijing
aimed at combating inflation. Beijing has eased off the brakes in recent months, however,
permitting banks once again to extend more loans to business. Policy makers now have room to
deliver more support to the economy.
The rise in the April index suggests that the eased measures have been effective. Yet, both demand
and output growth remain historically low.
Source: New York Times

POLITICS
PARLIAMENT TO DECIDE ON FOREIGN INVESTMENT REGULATIONS
Parliament will soon debate between two versions of a draft law on foreign investment regulations.
The first draft has been prepared by MP Z. Enkhbold in 2009, while the second was developed with
the lead of MP G. Zandanshatar in 2010.
Foreign countries are watching as the discussion regarding a new draft law goes under debate.
Mongolia is expected to change its foreign investment and invitation policies by regulating and
monitoring trends, effectively renewing the authority of the Foreign Investment and Foreign Trade
Agency (FIFTA).
If Parliament ratifies the draft laws, a part of Nariin Sukhait would be prohibited for sale.
Foreigners would then need permission from the Finance Ministry and FIFTA to complete
transactions such as the recently proposed Chalco offer to buy up to 60 percent of SouthGobi
Resources.
The draft law would also pertain to the security of communications, food, water, biological reserve
exploitation, and flights in addition to the mineral sector.
Source: News.mn
PASSAGE OF FOREIGN INVESTMENT REVIEW LAW POSSIBLE WITHIN TWO WEEKS, SAYS MP
The law on foreign investment provides that foreign investors can engage in business and services in
the territory of Mongolia not prohibited specifically by laws of Mongolia.
Law makers have found a need to regulate issues of introducing foreign investment into
strategically significant sectors for economic and security interests.
―It is fully possible to stop the SouthGobi-Chalco deal,‖ said G. Zandanshatar, an MP and Minister of
Foreign Affairs. ―Parliament may approve the bill because it already approved whether to discuss
the bill.‖ He added that Parliament could pass the law within two weeks.
Announcements from Parliament and the coverage by the media have created the impression that
the bill would likely receive fast approval, said Dale Choi, Frontier Securities chief investment
strategist. He added that SouthGobi Sands LLC, the Mongolian subsidiary of SouthGobi Resources,
would likely find itself in need of permission from the Mongolian government for the deal, in
addition to Toronto where SouthGobi Resources is listed.
Source: Frontier Securities
MPP BACKS HOLDING LOCAL AND STATE ELECTIONS ON SEPARATE DATES
The Mongolian People's Party (MPP) has announced that it has reached a consensus that local and
state elections would be held on separate dates.
O. Enkhtuvshin, head of the MPP, officially announced that the MPP would support legislation that
would have the state parliamentary elections and elections of officials in the capital on a separate
day from provincial elections. State elections are made on a proportional vote for parties into
Parliament, while direct elections are made for local elections.
Additionally, party members agreed that the vote for the spring referendum, which will include
some constitutional revisions, would be held on the same day as parliamentary elections.
AMENDMENTS TO VAT LAW SUBMITTED
Parliament Speaker D. Demberel has submitted a new value-added tax (VAT) draft law that would
impose taxes on entities earning over MNT 100 million. The proposal was just one of several
proposals Parliament received from the speaker.
The law proposes raising the minimum for those responsible for paying VAT taxes from MNT 10
million to MNT 100 million. According to a February fiscal report, currently 40 percent of all tax
payers meet the minimum of MNT 10 million, while only 1.6 percent of total government revenue
comes from VAT.

COMPANIES FALL SHORT ON LISTING REQUIREMENTS
Many of the companies listed on the Mongolian Stock Exchange are falling short on the fulfillment of
their duties.
With just 10 days before the fiscal year was to end, only 161 companies of the 353 listed on the MSE
had held their legally mandated shareholders meetings within the first four months of the year. Of
those, only 11 have distributed their promised dividends and fulfilled their legal responsibilities.
Ulaanbaatar Hotel paid out the highest dividend amount at MNT 300 a share, followed by Gan Hiiz
with MNT 150 and Hyaganat with MNT 148.4. Remicon and Erdenet Suvarga distributed dividends of
MNT 5 per share.
Firms listed on the MSE are held responsible for organizing a meeting with shareholders before May,
as per the Law on Companies. At these meetings companies are expected to deliver financial
reports and report on the activities of the governing board to the firm.
Source: Unuudur
DUNDGOBI RESIDENTS ORGANIZE ENVIRONMENTAL PROTECTION GROUP
Residents of Dundgobi Aimag have established an environmental protection group in response to the
damage incurred by mining activities.
The Dundgobi Land movement is a reaction to the environmental destruction and loss of land for
animal pasture due to Chinese-invested companies that have failed to live up to their rehabilitation
responsibilities, members said. The head of the movement, B. Munkhbolor, said that most of
Dundgobi is owned by foreign entities, especially Chinese.
Licenses have been issued for only 16 percent of land within Dundgobi, but mining activity has
spread much further, said the group. For example, mining has been permitted to 85 percent of the
land with Bayanjargalan Soum's territory, leaving large holes in the wake of mining operations.
Munkhbolor added that more than 800 wild sheep counted in Dundgobi are in danger from vehicles
due to roads for ore transport that pass through wild sheep pasture land.
Source: Unuudur
GOVERNMENT NAMES NEW CIS HEAD
Government has appointed former Ambassador of Mongolia to South Korea D. Gerel as the new chief
of the Central Intelligence Service (CIS) at a regular Cabinet meeting on Wednesday.
R. Bold, former chief of CIS, has left for Austria to serve as Mongolian ambassador. The CIS has
since worked without a chief. Gerel has become the second ambassador to head the intelligence
agency.
Source: News.mn
MINISTER CALLS FOR GREATER INSPECTION OF EXPORTED GOODS
The minister of social welfare and labor has given a report from his ordered investigation into coal
transporting companies that pass through the Shiveekhuren and Gashuunsukhait border points.
The minister reported findings of unreported goods crossing the border. She recommended that the
government employ an organization to inspect labor relations and safety in companies involved in
the transport of goods between Tsogttsetsii Soum and Gashuunsukhait.
Minister Gandi also advised for improved inspection of foreign employees to these companies, and
greater enforcement of laws. She proposed that foreign workers pay a social insurance premium and
that a department for white collar crimes be established within the police force.
Other recommendations included more recruitment for civil servants to work in social service and
labor departments, the opening of a state service office, and imposing mandated training to truck
drivers and operators working at Oyu Tolgoi and Tavan Tolgoi mining projects.
Source: Undesnii Shuudan
LITHUANIAN DELEGATION MAKES HEADWAY ON ECONOMIC TIES
A Lithuanian business delegation led by Deputy Foreign Minister Asta Skaisgiryte Liauskiene was
recently in Mongolia to discuss various ways of improving the scopes of bilateral business exchanges.

Officially, the visit had the purpose to strengthen Lithuanian-Mongolian economic cooperation with
focus on promoting export of Lithuanian goods and services to Mongolia.
The delegation comprised of representatives of nine Lithuanian companies in consulting, banking
higher education, environmental protection, and catering. The representatives attended a business
forum in Ulaanbaatar held by the Mongolian National Chamber of Commerce and Industry (MNCCI).
The delegation met with potential partners in Mongolia and visited some local companies. The
Lithuanians also discussed with Mongolia's officials opportunities of cooperating in bilateral trade,
transport connections between the countries, and way of exchanging Lithuanian higher education
opportunities.
Source: New Europe
ELBEGDORJ SUPPORTS KYRGYZ DEMOCRATIC TRANSFORMATION
President Ts. Elbegdorj paid a state visit to the Kyrgyz Republic from 3 to 6 April to have official
talks with Kyrgyz President Almazbek Atambayev.
In a joint statement: ―Mongolia expressed her readiness as the chair of the Community of
Democracies to support in every way the will and efforts of the Kyrgyz Republic aspiring to
strengthen the democratic governance and to build an open and just society with universal
participation of all people.‖
The Kyrgyz president reiterated his country‘s commitment to the values of democracy and progress
and congratulated Mongolia for its all-round efforts and active work as chair of the Community of
Democracies.
The Mongolian president delivered a speech at Kyrgyz Parliament praising the historic choice of the
Kyrgyz people for parliamentary governance and their resolute struggle for freedom and justice.
President Elbegdorj also attended a meeting with former Kyrgyz President Roze Otunbayeva to
congratulate her on her outstanding leadership during the Kyrgyz Republic's transition to a
parliamentary democracy.
Source: Community of Democracies
INSTABILITY AHEAD OF JUNE ELECTIONS
Mongolia is the darling of the mining industry, but there are questions about the country's stability
following the arrest of a former president in the heated political atmosphere ahead of June
elections.
Mongolia's three million people are sitting on untapped precious metal and mineral resources worth
an estimated USD 1 trillion and economic growth is barreling along with 17.3 percent last year. But
Mongolia's success in creating a democracy following its emergence from the collapsed Soviet Union
in 1991 has subsided into bitter factionalism, outrageous corruption and incompetent government.
The arrest of former president and now leading opposition leader N. Enkhbayar by agents of
Mongolia's Independent Authority Against Corruption (IAAC) is being widely seen as more of an
example of extreme partisan politics than of an effort by the administration to come to grips with
corruption.
The arrest led swiftly to a large demonstration by supporters of Enkhbayar, who was prime minister
in the communist-spawned Mongolian People's Revolutionary Party (MPRP)—later to be known as
the Mongolian People's Party (MPP)—government from 2000 to 2004, and then president from 2005
to 2009, when he was narrowly defeated by current President Ts. Elbegdorj of the Democracy
Party.
After Enkhbayar's defeat in the 2009 presidential race, he set up his own party under the MPRP
title, and it is set to do well in the June parliamentary elections. In preparation for that campaign,
on the day before he was arrested, he tried to lay to rest controversy about his role as president in
the 2008 riots and killings that broke out after word spread that the election was rigged.
The papers tend to support Enkhbayar's claim that the feeling was widespread among political
leaders that then-leader of the Democratic Party (DP) and current president Elbegdorj had incited
the violence by claiming the election results were fixed. Elbegdorj has always denied that
allegation, but the timing of Enkhbayar's arrest 10 days ago has inevitably fueled speculation that

the detention was spurred more by political motives than genuine concern with graft.
The IAAC, which answer to Parliament, insists the timing of the arrest of Enkhbayar was entirely
coincidental and came after a year of the former president ignoring repeated summons for
interviews.
The allegations from his arrest center around his profiting of the privatization of state property,
including a hotel and newspaper, and that he diverted studio equipment donated by Japan and
intended for a monastery to set up his own television station.
June's elections are approaching at a time when Mongolia is facing a host of contradictions
stemming from its transition to democracy. There are also the tectonic tremors in its economy as it
shifts from basis in agriculture and semi-nomadic herding on the country's vast grassland steppes to
one based on mining.
Political leaders have wrestled with the horrendous problems of trying to develop mining policy and
regulations, while pulling out society from poverty. In a demonstration of the lack of experience
and understanding among politicians and officials of how to manage this kind of economy, the
government decided to try to reduce poverty with MNT 21,000 a month to each citizen using money
from mining revenues. The result is 15 percent inflation this year so far, which could grow worse
with promises to boost salaries of all public servants by 53 percent.
Source: Vancouver Sun
ANNOUNCEMENTS
MINEXPO INTERNATIONAL, 24-26 SEPTEMBER, LAS VEGAS
MINExpo International, the world‘s premier mining event, will run from 24 to 26 September at the
Las Vegas Convention Center. Registration is open but housing is filling up fast! Registration
deadline in UB is 5 pm, 30 April as hotel rooms in Las Vegas are in short supply with close to
100,000 registrants expected.
This event is targeted to those in the coal, industrial-nonmetallic minerals, precious metals, ferrous
and non ferrous metals, sand, gravel, and stone industries. More than 1,600 exhibitors will display
all facets of mining—from exploration and surveying, mien site development, excavating, materials
handling and haulage, processing and preparation, drilling and safety equipment to computer
technologies, replacement parts and engineering, construction, and reclamation services—under
one roof.
In addition are 20 education sessions covering safety, bulk materials handling, exploration,
underground and surface mining, maintenance, processing, new mining projects, markets,
environmental issues, coal, and more. For more information visit MINExpo.com.
Please contact BCM at 70114442, tugi@bcmongolia.org or MNMA at 314877,
enkhbold@miningmongolia.mn for registration and additional information about the event.
___________________________________________
STARTUP WEEKEND ON 4-7 MAY
The fourth installment of Startup Weekend Mongolia will be held from 4 to 7 May at the WIBE
Campus in Handgait.
Startup Weekends are 54-hour events where developers, designers, marketers, product managers
and startup enthusiasts come together to share ideas, form teams, build products, and launch
startups to build applications and develop commercial cases around them.
For more information, visit the website swmongolia.org.
___________________________________________
FIFTH CORPORATE GOVERNANCE FORUM IN ULAANBAATAR ON 9 MAY
The fifth Mongolia Corporate Governance Forum will be held 9 May at the Kempinski Hotel, Khan
Palace in Ulaanbaatar. As a Supporting Organization for this event, members of the Business Council
of Mongolia will receive a special 10 percent discount.

The event will feature speakers such as Prime Minister S. Batbold and Ch. Khashchuluun, Chairman
of the National Development and Innovation Committee. The key points for discussion include
corporate governance in private companies, the reform process for corporate governance, and its
role in the financial sector. There will also be time devoted to the Capital Market Development
Initiative.
To register, visit the website cgdc.org.mn and fill out the registration form. For more information,
call Tsend-Ayush at 9910 5111 or email tsendee51@yahoo.com or tsend-ayush.t@cdgc.org.mn
___________________________________________
FUTURE MONGOLIA, 16-19 MAY, UB SPORTS PALACE
Mongolia first-ever world-class exhibition, Future Mongolia, will open from 16 to 19 May at Buyant
Ukhaa Sports Palace in Ulaanbaatar. Future Mongolia is an international trade fair and conference
for sustainable development.
Future Mongolia is on the best track to become the leading trade fair in Mongolia for the
international capital goods industry. Industry giants, e.g. Caterpillar, Liebherr and the mining
equipment manufacturer TAKRAF already confirmed their participation. The organizer is confident
that the envisaged number of more than 100 exhibitors will be reached. BCM is a Supporting
Organization for the trade fair. For more information visit the website.
Those interested in the event can call +49 89 244 41 9370 or email info@future-mongolia.com.
___________________________________________
2nd COALTRANS MONGOLIA IN ULAANBAATAR ON 23-24 MAY
Coaltrans Mongolia will be held from 23 to 24 May at the Chinggis Khan Hotel in Ulaanbaatar.
Having overtaken Australia to become the largest exporter of metallurgical coal to China at the end
of 2011, the Mongolian coal market continues to establish itself as a competitive producer in the
global coal markets. This event will explore the development of coal projects in the country and
offer insight into what level of influence Mongolia will have over the future of coal prices.
Guest speakers include Graeme Hancock, Chief Operating Officer of Erdenes Tavan Tolgoi, and Dr.
G. Battsengel, Chief Executive Officer of Mongolia Mining Corp.
BCM is a Supporting Organization again this year for Coaltrans Mongolia. For more information visit
coaltrans.com/mongolia or email coaltrans@euromoneyplc.com
___________________________________________
ALS THREE-DAY COAL QUALITY COURSE BEGINS 28 MAY
The ALS Coal Quality Course will run from 28 May until 30 May at the Blue Sky Tower Hotel. The
early bird registration discount for a cost of USD 1250 ends 7 May.
The course is a comprehensive introduction to the broad issues of coal quality, from mining and
preparation through to the end user. It is delivered in bite-size modules to assist students in
understanding how to obtain the maximum benefits from a coal product.
Students will attend the three-day comprehensive course on broad issues of coal quality, from
exploration, to mining, testing and preparation through to delivery to the end user, delivered by
expert presenters.
For more information call 343882, 99092732, or email b.sainbileg@alsglobal.com for registration
and additional information about the course.
___________________________________________
REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013
Mongolian Mining Directory-2013 which provides information database for Mining companies,
investors, suppliers, service companies, government and non government organizations will be
published for the fourth year to commemorate the 90th anniversary of the Mongolian mining
industry. The MMD is distributed free of charge to international and domestic mining companies,
international conferences and exhibition, embassy offices in Mongolia and foreign countries to
investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants
who are interested in advertising their products and services in Mongolian Mining Directory-2013.
For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call
+976-7011 5590.
___________________________________________
“MM TODAY” on MNB-TV, Fridays at 18:30 [TONIGHT]
BCM is pleased to announce Mongolian National Broadcasting continues its cooperation with BCM on
―MM Today‖. This English news program is aired every Friday for 10 minutes and is scheduled for
18:30 tonight! Tune in to watch this program that reports stories from today‘s BCM NewsWire.
___________________________________________
“BSPOT” ON B-TV, MONDAY TO FRIDAY AT 18:20
B-TV (Business TV) now telecasts a 10-minute English-language news program called BSPOT every
evening from Monday to Friday at 18:20, taking most of the stories from the BCM NewsWire.
___________________________________________
POSTINGS ON MONGOLIAN WEBSITE „PRESENTATIONS‟ AND „NEWS‟ SECTIONS
The new ‗Presentations‘ section on BCM‘s Mongolian website which can be reached via link to
bcm.mn/itgeluud. Several presentations already posted include 9 from Coal Mongolia in February
9-10, 2012.
As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s
―Open-Government.mn‖ site are regularly posted.
___________________________________________
POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND „MONGOLIAN
BUSINESS NEWS‟
On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations
from BCM‘s April 23 monthly meeting, 12 presentations on Mongolian entities at Mines and Money
Hong Kong 2012 on March 21-23, 11 presentations from Coal Mongolia 2012 on February 9-10, 7
speeches from the Mongolian Investment Summit on December 8-9, 2011 in London, several
speeches at the Risk Management Forum on November 8 co-organized by BCM and Mandal Insurance,
speeches at Discover Mongolia 2011, and speeches from all BCM‘s monthly meetings in 2011-12.
Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit
Barometer, April 2012 by Sant Maral Foundation (both Mongolian and English versions); ADB‘s Asian
Development Outlook, April 2012; detailed results of BCM‘s NewsWire survey of March 2012; World
Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive Summary of the Mongolian
Real Estate Report 2012 by M.A.D. Investment Solutions; Mongolia – World Bank Country Survey
2011; Welcoming remarks by Jim Dwyer, BCM at Mongolia Investment Summit 2011 Hong Kong,
Mining Journal Supplement for Mongolia, October 2011; and ―Mongolia‘s Mining Services Cluster
2010‖, Professor Michael E. Porter, Harvard University, The Microeconomics of Competitiveness.
We are now posting some news stories and analyses relevant to Mongolia to BCM website's
‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all
together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,
and will incorporate items that are already on the home page, so that it presents a consolidated
account of the week‘s events.
___________________________________________
SOCIAL NETWORK WITH BCM
The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.
Keep up to date on the latest business deals in Mongolia and how the climate for investment is
improving each day with BCM.
Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in
the NewsWire with the community.
Hear breaking news and announcements as they happen when you follow BCM on Twitter at
http://twitter.com/#!/bcMongolia.
Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better
business environment in Mongolia today.
Of course for news information, interviews, and announcements regarding our organization, visit
the official BCM website at bcmongolia.org and bcm.mn.
ECONOMIC INDICATORS

INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
March 31, 2012 *15.3% [source: NSOM]
*Year-over-year (y-o-y), nationwide
Note: 17.3% y-o-y, Ulaanbaatar city, March 31, 2012
CENTRAL BANK POLICY RATE
December 31, 2008 9.75% [source: IMF]
March 11, 2009 14.00% [source: IMF]
May 12, 2009 12.75% [source: IMF]
June 12, 2009 11.50% [source: IMF]
September 30, 2009 10.00% [source: IMF]
May 12, 2010 11.00% [source: IMF]
April 28, 2011 11.50% [source: IMF]
August 25, 2011 11.75% [source: IMF]
October 25, 2011 12.25% [source: IMF]
March 19, 2012 12.75% [source: Mongol Bank]
April 18, 2012 13.25% [source: Mongol Bank]
CURRENCY RATES – April 26, 2012
Currency Name Currency Rate
U.S. dollar USD 1320.51
Euro EUR 1750.60
Japanese yen JPY 16.23
British pound GBP 2139.29
Hong Kong dollar HKD 170.04
Chinese yuan CNY 209.45
South Korean won KRW ` 1.16
Russian ruble RUB 45.05
Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.

BCM NewsWire Highlights Mongolian Business and Economic Developments

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